January 29, 2013

Virgin Galactic To Pay Rent For New Mexico Spaceport, Begrudgingly

Virgin Galactic is begrudgingly agreeing to pay New Mexico rent on the spaceport the state built for Richard Brandon's space tourism business, according to a report by The Associated Press (AP).

The report said that Virgin Galactic wrote to the New Mexico Spaceport Authority that it does not believe the state has finished the work necessary to trigger activation of its $1 million annual rental obligation. Virgin also said that if the work is not complete, it "may either stop paying rent, pay reduced rent or give notice to terminate" its lease.

The company has expressed its concerns about New Mexico's inability to attract more businesses to the project, and has hinted it could leave if lawmakers refuse to expand liability exemptions for the commercial space industry.

Spaceport America was developed under an agreement between former Governor Bill Richardson and Branson, which called for taxpayers to build the spaceport and Virgin Galactic to develop the spacecraft.

AP said that the state received a certificate of "base building standard completion" in November, which is supposed to trigger rent and user fees from Virgin Galactic.

Branson's company is supposed to give the state a $2 million letter of credit to serve as a deposit, but it says it does not believe the state has finished the necessary work to trigger activation. Jonathan Firth, Virgin Galactic's director of projects and operations, wrote in an email to NMSA Executive Director Christine Anderson that NMSA has agreed not to charge Virgin Galactic any user fees until the company starts flying.

Anderson said in response to Virgin Galactic's statement that NMSA confirms its right to demand user fees for a minimum number of missions, or terminate the lease if Virgin Galactic fails to fly at least 25 missions in a calendar year.

"While the starting date is ill-defined in the lease," Anderson wrote in a statement obtained by AP, "I think this highlights the need for VG to provide NMSA accurate flight projections with frequent updates as appropriate."

She also noted that the rent is due under terms of the lease and development agreements, and that the state is working to complete the issues Virgin Galactic had identified.

"Frankly, whether NMSA completes the punch list by March 31st or not, does not change the fact that Base Building Standard was achieved on November 14 and thus rent was to commence on Jan. 15 per the lease," she wrote in the statement.

Virgin Galactic hasn't opened up about when flights would begin, but Branson had originally said they would start in 2011. However, the last estimate for flights, according to AP, was to begin in early 2014.